Two weeks ago, I broke down the House’s Ways & Means Committee's proposed changes to the IRA in the reconcilation bill, aka "The One Big, Beaufitufl Bill." Unfortunately, what passed with a single vote margin is significantly worse than what the solar industry was hoping for. While we would’ve preferred a stronger starting point, the bill now heads to the Senate, where we still have an opportunity to fight for better outcomes.
Timing
The Senate is publicly aiming to pass their version of the bill by the Fourth of July, though many believe August is a more realistic timeline given the range of competing priorities. Either way, we should know more soon.
As I did in my last post, I’m narrowing my focus here to what this bill means for utility-scale and community solar. There are certainly broader setbacks across the clean energy spectrum—cuts to residential solar, EVs, and green hydrogen, to name a few—but let’s hone in on the three most consequential provisions that directly impact our sector:
Accelerated ITC Phase-Out Timeline
The House-passed bill introduces a drastic shift in the Investment Tax Credit (ITC) timeline. Under the new language, projects must begin construction within 60 days of the bill’s enactment and be placed in service no later than December 31, 2028, to receive the full credit. This is a sharp departure from the original IRA schedule, which featured a step-down period stretching out to 2034.
What’s particularly concerning is the change in how eligibility is measured. Historically, phase-outs have been tied to the date a project began construction, which gave developers a more manageable and predictable runway. This new bill instead ties eligibility to the year a project is placed in service—a milestone that can be influenced by countless variables outside of a developer’s control. That change alone introduces serious uncertainty into long-term project planning, particularly for utility-scale developers with existing delivery contracts that are scheduled beyond 2028.
This shift is not ideal for the market and exposes developers to new risks around delays, financing, and contractual obligations. It’s a provision that the industry should push back on aggressively—and one that we should work to revert to construction start language as negotiations move to the Senate.
Foreign Entity of Concern (FEOC) Provisions
Perhaps the most damaging component of the bill is the introduction of FEOC rules, which could have sweeping consequences for project eligibility and the solar supply chain. Starting in 2026, any project that is owned by or sources materials from a “prohibited foreign entity” would be ineligible for the ITC.
Let’s be clear: this is aimed squarely at China. But the way this section is written leaves far too much room for confusion and disruption. For example, a single component, subcomponent, or even a critical mineral from a prohibited entity could disqualify an entire project from receiving the ITC. The definitions are vague and the scope is broad—so much so that some believe it could take the Treasury years to fully interpret the rule. That’s not just problematic for developers—it’s a nightmare for financing parties who rely on clear rules and timelines.
While the bill does include some exemption language, it’s currently very narrow. This provision demands major revision before the bill is finalized. As it stands, it would be nearly impossible for most developers to verify full compliance with the sourcing rules, which risks putting the entire sector into uncertainty starting in 2026.
ITC Transferability Win
Amid the concerning changes, there’s one bright spot: the final House version of the bill does not touch ITC transferability. The original proposal from the Ways and Means Committee had included a phase-out of this essential financing mechanism, but thankfully, that idea didn’t make it into the version that passed. Transferability remains intact—and that’s an important win for developers, especially those working in community solar and smaller-scale projects.
On to the Senate
The spotlight now turns to the Senate. This is our chance to fix what’s broken, push for clearer and fairer rules, and make sure the U.S. can meet its clean energy goals without unnecessary roadblocks. If you care about the future of solar, now’s the time to get involved—lobby through your trade associations, contact your Senators, and do everything in your power to ensure that the final bill supports a strong, resilient solar industry.
And that’s Watt's the Deal!
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